A bankruptcy court lacks the power to require a chapter 13 debtor to include a plan provision pledging to pay into the plan the cash equivalent of any non-cash property obtained post-confirmation. Roseberry v. U.S. Trustee, No. 18-1039 (S.D. Ill. Dec. 18, 2018). Read More
Tag Archive: Property of Estate
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Court Exceeded Power with Plan Provision Re: After-Acquired Property
Posted by NCBRC - January 2nd, 2019
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Ninth Circuit Certifies Community Property Question to Calif. S.Ct
Posted by NCBRC - November 20th, 2018
In Brace v. Speier (In re Brace), the Ninth Circuit certified the following question to the Supreme Court of California: “Does the form of title presumption set forth in section 662 of the California Evidence Code overcome the community property presumption set forth in section 760 of the California Family Code in Chapter 7 bankruptcy cases where: (1) the debtor husband and non-debtor wife acquire property from a third party as joint tenants; (2) the deed to that property conveys the property at issue to the debtor husband and non-debtor wife as joint tenants; and (3) the interests of the debtor and non-debtor spouse are aligned against the trustee of the bankruptcy estate?” No. 17-60032 (9th Cir. Nov. 8, 2018) (order certifying question). Read More
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Fifth Circuit Addresses Valuation of Mobile Home
Posted by NCBRC - September 18th, 2018
Delivery and set-up costs are not included in the valuation of a mobile home under section 506(a). 21st Mortgage Corp. v. Glenn, No. 17-60533 (5th Cir. Aug. 13, 2018).
Kayla Glenn elected to retain her mobile home and pay it off with 5% interest through her chapter 13 bankruptcy. 21st Mortgage objected to Ms. Glenn’s proposed plan based on her valuation of the property as not including the cost of delivery and set-up. The bankruptcy court confirmed the plan and the district court affirmed. 21st Mortgage appealed. Read More
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Battle of the Valuation Reports
Posted by NCBRC - August 14th, 2018
Retail value under NADA, rather than trade-in value, governs valuation of car under section 506(a)(2). In re Burton, No. 17-10979 (Bankr. D. Del. May 16, 2018).
Deborah Burton filed an amended chapter 13 plan in which she listed the value of her secured vehicle as $8,100 and proposed a 5% interest rate. In support of her valuation, Ms. Burton submitted an appraisal from a car dealership stating the vehicle’s trade-in value, taking into account damage and wear. Ally Financial, the secured holder of the car loan, objected to the valuation and the interest rate, arguing that, based on a National Automobile Dealers Association valuation, the vehicle should have been valued at $11,105, and should be repaid at an interest rate of 7%. Both parties maintained that the holding in Assocs. Commercial Corp. v. Rash, 520 U.S. 953 (1997), supported their valuation. Read More
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No Distribution to Creditors after Chapter 13 Case Voluntarily Dismissed
Posted by NCBRC - August 10th, 2018
The chapter 13 debtors who voluntarily dismissed their bankruptcy case were entitled to the proceeds from the sale of their homestead. Viegelahn v. Lopez, No. 17-50297 (5th Cir. July 31, 2018).
Chapter 13 debtors, Manuel and Dolores Lopez, sold their homestead without prior court approval and did not use the proceeds to purchase another home. Their confirmed plan provided that estate property would not revest in the debtors except upon order of the court. For various reasons, including Mr. Lopez’s arrest and deportation, the Lopezes had difficulty making plan payments. In response to the trustee’s third motion to dismiss, Ms. Lopez sought to use the proceeds from the sale of their homestead for plan payments after she paid approximately $20,000 for mandatory eye surgery. The trustee objected to any hold-back of the sale proceeds. The bankruptcy court agreed to allow Ms. Lopez’s modification, adding that if the Lopezes voluntarily dismissed their bankruptcy, they would be entitled to retain all the proceeds from the homestead sale. The Lopezes moved for voluntary dismissal and the trustee objected on the basis of bad faith. The bankruptcy judge granted the motion to dismiss and found that the proceeds should be returned to the Lopezes. The district court affirmed the dismissal but reversed on the issue of returning the proceeds. Read More
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Debtor May Not Modify Rights of Tax Purchaser
Posted by NCBRC - February 13th, 2018
By operation of state law, a tax sale purchaser has title to the purchased property and cannot have its rights modified in chapter 13 to permit the debtor to redeem over the course of the plan. Deed Co. v. Jimerson, No. 17-513 (N.D. Ga. Jan. 23, 2018). Read More
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Code Does Not Entitle Trustee to Sell Free and Clear of Creditor’s Judgment Liens
Posted by NCBRC - January 11th, 2018
The bankruptcy estate’s interest in property does not become superior to a valid senior judgment lien even though the bankruptcy trustee took the steps necessary to avoid a fraudulent transfer and bring the property into the estate. In re Knight, No. 16-584 (Bankr. D. S.C. Nov. 6, 2017).
Apex Bank obtained two judgments against Talmadge Knight in state court. By operation of state law, the judgments resulted in liens on Mr. Knight’s property. Shortly thereafter, Mr. Knight transferred his farm property, Saluda, to Ambler Road, LLC., an entity owned solely by Mr. Knight. Mr. Knight later filed for chapter 7 bankruptcy. Apex filed two proofs of claim totaling approximately $1.9 million. The trustee filed an adversary proceeding to avoid the transfer of the Saluda property from Mr. Knight to Ambler. That proceeding was settled and the transfer avoided. The trustee then arranged a sale of the property for $146,000 and moved the court for permission to sell free and clear of liens. The motion contained some inaccuracies about the property and did not mention Apex’s judgment liens. Read More
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Title-Pawned Vehicle Drops Out of Estate When Not Redeemed Post-Petition
Posted by NCBRC - January 5th, 2018
A chapter 13 plan treating a loan secured by property which had been title-pawned prior to bankruptcy should not have been confirmed where the debtor failed to redeem the property within the redemption grace period. TitleMax v. Northington, Nos. 16-17467, 16-17468 (11th Cir. Dec. 11, 2017). In so holding, the Eleventh Circuit deemed TitleMax’s continued prosecution of its motion for relief from stay as equivalent to an objection to confirmation.
Debtor, Gustavius Wilber, entered into a title pawn agreement with TitleMax pledging his car as security for a loan. After the payment due date for the loan expired but before the statutorily-mandated redemption period had lapsed, Mr. Wilber filed for chapter 13 bankruptcy and proposed a plan to repay the loan with interest. TitleMax filed a motion for relief from stay. At the confirmation hearing, which took place after the redemption period had lapsed, TitleMax continued to press for relief from stay but specifically indicated that it was not objecting to confirmation of the plan. The bankruptcy court confirmed the debtor’s plan and later denied TitleMax’s motion for relief from stay. In re Wilber, 551 B.R. 542, 544–47 (Bankr. M.D. Ga. 2016). The district court affirmed. Title Max v. Northington, 559 B.R. 542, 545 (M.D. Ga. 2016). Read More
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Abandonment May Not Be Revoked Upon Unexpected Increase in Value
Posted by NCBRC - November 2nd, 2017
A trustee’s abandonment of estate property may not be revoked upon a finding that the property had greater value than expected so long as the debtor properly revealed the asset in his schedules. In addition, the debtor had no duty to supplement his schedules to include the unexpected surplus from sale of the abandoned property. Hardesty v. Haber (In re Haber), No. 17-3323 (6th Cir. Oct. 30, 2017) (unpublished). Read More
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Contingent Interest in Realty Commissions Is Property of Estate
Posted by NCBRC - September 5th, 2017
The debtors’ contingent interest in realty sales commissions based on transactions that were not closed at the time of their bankruptcy filing was property of the bankruptcy estate where all of the debtors’ actual realty services were provided pre-petition. Anderson v. Rainsdon (In re Anderson), No. 16-1316 (B.A.P. 9th Cir. Aug.11, 2017).
Chapter 7 debtors, Melanie and Stephen Anderson, were real estate agents with Keller Williams Realty East Idaho. Under their agreement, sales commissions earned by the Andersons were paid directly to Keller Williams. Keller Williams then retained a portion and paid the remainder to “Bastille,” a separate company established by the Andersons post-petition. Bastille then paid the Andersons a “salary.” On the petition date, the Andersons were involved in thirteen real estate transactions in which the contracts between buyers and sellers had been signed but the sales had not yet closed. The chapter 7 trustee sought turnover under section 542(a) of $52,485.92 in commissions the Andersons would acquire post-petition based on these sales agreements. The bankruptcy court ordered turnover in the amount sought. Read More
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